Taxation and Wage

taxation

money paid to the government to fund public services

who collects tax

revenue

direct tax

tax increases with income

indirect tax

same rate regardless of income

3 examples of direct tax

PAYE, PRSI, USC

3 examples of indirect tax

VAT, customs duty, motor tax

gross pay

pay before deductions

net pay

pay after deductions

tax credit

reduces PAYE liability

wage slip

record of pay and deductions

statutory deduction

required by law

non statutory deduction

voluntary

example of a statutory deduction

PAYE

example of a non statutory deduction

pension

progressive tax

the more money you make the more tax you have to pay

tax credit

money you get back after paying tax

how does tax credit affect your PAYE

because tax credits are spread evenly throughout the year

tax avoidance

legal methods to reduce tax

example of tax avoidance

claiming credits

tax evasion

illegal failure to pay tax or declare income